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Rising numbers of Minnesota childcare providers say they are not confident their businesses are sustainable, a concerning new survey shows. 

Economic conditions are so difficult that one-third of those responding to the survey by the Federal Reserve Bank of Minneapolis and the nonprofit group First Children’s Finance said they’ve had to stop paying themselves in order to pay the rising costs of food and insurance.

“That's always really alarming to me,” Suzanne Pearl, Minnesota director of First Children’s Finance, told reporters Wednesday as the survey results were released.

“I know that happens with a lot of small businesses,” she added. “Your small business is kind of entwined with your life, but I don't know that that's a sustainable way to do business, especially for a sector that's as critical to the rest of the economy as childcare is.”

The latest survey stands in contrast to 2024, when many providers said they were 

optimistic about rising enrollment and more confident about sustaining their businesses

In 2025, though, Minnesota childcare providers saw decreases in enrollment that were exacerbated in 2026 by the surge of federal immigration agents in Minnesota and the new paid family leave program in early January. 

The paid family leave program is delaying when families might send their infants to childcare. Infants are the largest revenue source for centers. 

“This is another potential change to the childcare market, and we'll be watching over the next few years to learn how the paid leave program impacts the demand for childcare, and how that might, in turn, impact the childcare business model overall,” Pearl said.

Programs saw the largest enrollment decrease for preschool-age children. Pearl said this may indicate a shifting customer base in childcare due to the availability of free or low-cost options for preschoolers.

While food costs have been on a steady incline, insurance was the largest cost increase reported in the new survey.

“We've been hearing for a few years from childcare businesses about the rising cost or even inability to secure business liability insurance,” Pearl said. “In recent months, we've learned of some centers whose insurance carriers have pulled their policies altogether and they had to shut down.”

The ability of families to afford childcare remains a constant worry among the more than 750 providers who provided survey responses from April 8-24. 

The vast majority of childcare providers surveyed are part of the Minnesota Great Start Compensation Support Payment Program, a state effort to subsidize pay and benefits of childcare workers. Yet the new results found businesses less confident about the state investment in childcare.

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Kyra Miles

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A new survey from First Children’s Finance and the Federal Reserve Bank of Minneapolis shows that 2024 improvements in enrollment and business sustainability in the Minnesota childcare business sector have stopped or regressed. 

Children sit in a circle and sing a song at a child care center

1 in 3 Minnesota childcare providers can’t pay themselves, survey finds

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